Better laws for safer workplaces

  • Margaret Wilson
Labour

Monday, 8 October 2001Speech Notes

Introduction

Thank you for the invitation to address you today.

The fact that New Zealanders are killed, injured or develop illness as a result of their work is a matter of serious concern to this government.

People have a right to be safe at work.

Background

Last year the Government signalled it was looking at changes to our health and safety laws. The focus of these changes was on the three broad areas of:

·Improving the coverage of the Health and Safety in Employment Act 1992 (HSE Act) to ensure that all employees and other people who are in workplaces are covered by a consistent set of health and safety laws.

·Encouraging a greater sense of partnership between employers and employees - to ensure effective communication on health and safety matters

·Effective enforcement - to provide for greater incentives for compliance. ensuring comprehensive cover of New Zealand workers, effective communication between employers and employees through employee participation in health and safety, and effective enforcement of the laws.

A discussion document was released for wide public consultation. More than 170 submissions were received, analysed and fed into the law-making process.

Before I go into the detail of the review and the outcomes of the consultation process - which I know many of you here today were involved in - it is important to outline the objectives we are seeking to achieve, and some background to Government’s overall approach to health and safety matters.

It is clear that workplace injuries and illness have an enormous cost – some $3.18b per annum. These costs are the costs to the injured worker and their families – economic, physical and psychological, the costs to the employer – lost production, reduced employee morale and so on.

Reducing workplace injuries and illness will result in significant gains to the individual worker, to the country as a whole and will in turn improve workplace productivity.

The relationship with other legislation

The review of the health and safety legislation is driven by exactly the same factors that drove the ERA, namely the ideas of:

·good faith,
·partnership, and
·co-operation.

Thus our strategy for improving workplace health and safety has three main components, the ACC reforms, The Employment Relations Act and the review of the Health and Safety in Employment Act 1992.

This review builds on the concepts that underpin the Employment Relations Act.

The ERA provided a new framework for entering into and maintaining employment relationships. The ERA’s primary objective is to build productive employment relationships, based on good faith.

The ERA seeks to promote mutual trust and confidence between all those involved in employment relationships. Trust between the parties, and confidence in each other is the very heart of good safety practice. Good safety practice builds trust and confidence. A poor approach to safety destroys it.

Workplace relationships

One of the most interesting experiences of the new employment laws has been the success of the Mediation Service and the extraordinary level of agreement that can be produced even between employers and employees who have reached a crisis in their relationship.

Clear law, support from an appropriate agency and good faith produce good agreement and a way forward.

What more can be achieved then in circumstances where relationships, far from being in crisis, are already good and everyone involved has the shared aim of improving safety and avoiding illness, injury and disease?

Achieving a better balance between the rights and responsibilities of employees and employers in relation to safety is a major objective of this government. The HSE Act assumes that employers have primary responsibility for health and safety, and does not give any authority to employees to participate in health and safety management.

The present laws

The HSE act is now nine years old. When it was introduced, the Act was a major reform. It replaced a plethora of detailed and prescriptive legislation with a performance based framework based on the principle that employers should take " all practicable steps" to minimise workplace hazards.

The Government believes this framework is sound. But the Act has not in all areas generated a culture where workplace health and safety is a real priority.

A common thread throughout all these reforms is the notion of partnership - joint employer, management, and union and employee responsibility for health and safety.

A new approach

The review provides the basis for a new approach to the management of health and safety in workplaces.

Workplace health and safety is best achieved by enabling those in workplaces to manage safety in ways that make sense to them. Legislation cannot provide solutions for every possible hazard.

Therefore, the law sets a standard and establishes that good processes must be followed to assess, eliminate, isolate or minimise hazards that may harm people.

We must reinforce the seriousness with which human life and well being should be treated in the workplace. The law must emphasise the importance of the interdependence of people in the workplace, and therefore the importance of those at work taking responsibility for the wellbeing of themselves and others.

Our task is to ensure that a consistent legislative framework applies to New Zealand's workplaces to enable employers, employees, self-employed people, and the Government to improve workplace health and safety.

We will encourage a more inclusive approach to workplace health and safety management and strengthen the health dimension.

There is wide support for moves to rationalise coverage, particularly in the transport sector, and reinforce the legislation's original intended comprehensive work coverage.

In a wider context, we seek change that will better align the Government's occupational health and safety strategy with employment relations reforms and strengthen the penalties against poor injury prevention practice and outcomes.

The outcome of the process now reaching the stage of legislation will improve the daily lives of New Zealanders in workplaces, and contribute to good relationships and more efficient workplaces.

And a new law will allow New Zealand to move closer towards ratifying the International Labour Organisation Convention on Occupational Safety and Health.

Employee participation

The issue of employee participation formed part of the 1989 Advisory Council on Occupational Safety and Health. Employee participation in workplace safety was strongly recommended - not for ideological reasons - but because it had been demonstrated to improve outcomes.

The ACOSH recommendations did make it through to the Health and Safety legislation, but in a much-watered down form.

Employee involvement is there, but only requires employers to give employees the opportunity to be involved in Health and Safety matters. A select committee, under the previous government, supported the meaningful and enforceable involvement of employees in workplace health and safety matters.

There is enough international evidence of the effectiveness of employee involvement in improving Health and Safety outcomes to make this a priority in changing the law.

Employee participation, of course, must be developed in a way which improves business operations.

The good faith concept can be reflected in workplace health and safety. Dialogue is often the first step to resolving health and safety matters. Employee participation initiatives will promote ongoing open communication between employers and employees (and unions), and joint ownership of health and safety issues.

They also encourage employers and employees to seek outside help about health and safety matters from the Occupational Safety and Health Service (OSH). The Mediation Service would also be available to provide advice.

Research in New Zealand and overseas shows that employee involvement in health and safety is associated with best practice in health and safety management. It generally improves accident, illness and injury rates in the workplace and therefore reduces economic costs and negative social consequences.

The research shows that employee participation is associated with good health and safety practice and compliance with the workplace safety laws. Its absence is associated with poor practice and non-compliance.

One study of employee participation in the United Kingdom shows that legislated employee participation, in the form of health and safety representatives and committees, reduces the overall costs and incidence of injury by up to 50 percent.

Despite the research findings, a large number of employers do not involve employees in workplace health and safety management. The present legislative requirements do not provide sufficient incentives for employers to involve employees.

One major reason for this may be because the costs of accidents are not borne fully by employers and employees. This means that market mechanisms alone are unlikely to direct employers towards best practice of employee involvement.

The HSE Act requires a systematic and dynamic approach to health and safety management. This is the fundamental requirement for employers to enable best practice. Employee participation in the development, implementation, and management of health and safety systems is best practice but is not required by the Act; this weakens the HSE Act framework.

Many employees have useful knowledge about the hazards that they face in their workplace, and ideas on how to remove or reduce them. The proposed changes will help ensure employee knowledge is utilised, by requiring employers to discuss with employees how health and safety is to be managed in an ongoing way.

Coverage

Another issue the changes will address is the coverage of the legislation.

Currently there are different laws applying in land transport, aviation and at sea. There may be some justification for some specialised areas having special laws. But the test must be: do these different laws contribute to improved health and safety outcomes for people in places of work?

We have seen last year in the Tranz Rail inquiry that the restricted application of the HSE Act to rail operations did not contribute to improved health and safety outcomes; in fact it mitigated against this.

Having comprehensive coverage for workplaces and those employed in workplaces reduces doubts and wasteful argument over the application of the HSE Act. It also encourages transferability of skills and knowledge needed to apply the HSE Act. The coverage proposals plug gaps in coverage of the HSE Act.

A further coverage issue currently being debated is the need to consider stress and fatigue when managing health and safety. The Act currently covers all hazards and harm, including stress and fatigue, but explicitly stating it would increase awareness and certainty and help ensure that these important issues are not ignored or considered unimportant by employers, employees or OSH.

I would note that OSH is currently updating the body of scientific knowledge on the effects of stress and fatigue in the workplace with the intention to develop a Code of Practice on stress and fatigue. This is expected to be completed by the middle of next year in consultation with unions, industry and other experts.

Enforcement

The issue of how to get people to obey the law is one which troubles all Ministers – and the same broad options appear: we can inform, educate, persuade and penalise. And, if we penalise, there is the issue of how likely the person breaching the Act is to be caught, and action taken against them.

The deterrent effect of prosecutions is known to partly depend on both the probability of being prosecuted and the size of penalties imposed. Both the perceived severity and perceived certainty of punishment influence injury rates, although certainty has a substantially stronger effect than severity.

Raising fines levels is as an incentive for medium to large organisations to comply with the HSE Act is one option. Recent research indicates that small businesses already perceive the fine levels to be high and that increasing the certainty of being prosecuted would be a more significant driver for those small employers that choose not to comply.

However, the level of penalty needs to reflect the seriousness of the offence or potential consequences of the exposure, event or injury.

Strong penalties are essential for exposures, events or accidents that have the potential for death or serious injuries.

We have moved some way since the Factories and Commercial Premises Act 1981 was the most significant health and safety Act with the highest fine set at $5000 for charges involving injury and $10,000 for charges involving a fatality.

There was a ten-fold increase in penalties under the HSE Act.

The HSE Act is an enabling framework. The Act places “ownership” for the management of occupational safety and health with employers and employees, to the greatest extent practicable. For this reason, the Act has a range of measures to encourage compliance. The Department of Labour’s Occupational Safety and Health Service (OSH) administers the Act. OSH uses advice and information to reduce the need for enforcement activity. Where a firmer approach is warranted, “enforced compliance” is often more appropriate. There are specific tools available to an HSE inspector to obtain this compliance –for example, the issuing of improvement or prohibition notices. As a last resort, underpinning all these measures, prosecution is undertaken.

The average fine imposed by the Courts since the HSE Act was introduced is $6,196.15. This can be compared to an average fine of approximately $500 in the two years prior to the passing of the HSE Act.

Other research has found that fine levels and increased severity alone may not be the best approach for improving health and safety outcomes in all types of business, particularly those of small size . These businesses often have considerable anxiety about the possibility of an HSE inspection or prosecution.

They also have the perception that fines imposed are substantial. Yet this “fear” does not persuade them to reduce the risk of prosecution, as they perceive the risk of an HSE inspection to be low. This finding strengthens the assertion that increased fine levels alone are not sufficient to result in improved health and safety outcomes.

Fine levels are currently low in comparison with both health and safety legislation in other jurisdictions and fines for public welfare offences in New Zealand. The level of fines being imposed is not acting as a sufficient deterrent. This is shown by the fact that 12% of offenders have been prosecuted more than once under the HSE Act.

There is an apparent lack of relativity in the fines imposed for the protection of human life as against other matters. The Commerce Act imposes a maximum fine of $5 million. Other Acts range in maximum penalties from $125,000 in the Animal Welfare Act to $500,000 in the Hazardous Substances and New Organisms Act 1996 and the Fisheries Act 1996.

Section 97(a) of the HSNO Act provides that the Department of Labour shall ensure that the provisions of this Act are enforced in any place of work. Failure to control a hazardous substance is an offence under section 6 of the HSE Act and section 109 of the HSNO Act. An HSE inspector could take a prosecution for this offence under either the provisions in the HSE Act or the HSNO Act.

Under the HSNO legislation, failure to control a hazardous substance could result in a fine of $500,000 or imprisonment for three months. If the fine is a continuing one, the offender is subject to a further fine of $50,000 for every day or part of a day during which the offence has continued.

This is in stark contrast to the HSE Act, where the maximum penalty for knowingly failing to control a hazardous substance is $100,000 or one year’s imprisonment.

Summary of the government’s intentions

Our aim is to provide a more complete framework applicable to more workplaces, to enable employers, employees, and OSH to improve workplace health and safety.

We will encourage a more inclusive approach to workplace health and safety management, would strengthen the health dimension of the HSE Act and would rationalise the coverage of the HSE Act (especially in the Transport sector).

In a wider policy context, we will better align the HSE Act with the Government’s employment relations reforms and strengthen the penalties against poor injury prevention practice and outcomes.

Conclusion

We are now very close to the introduction of legislation which will confront the necessary changes to improve health and safety in our workplaces.

This legislation results not only from an intensive policy process in government, but from widespread discussion and consultation with industry, professional safety experts, unions, employees and – perhaps most poignantly of all – victims and the families of those made ill, injured or killed in our workplaces.

Your voices, and their voices, have been heard. The government has listened, and learned. Our new legislation will be widely supported.

And our workplaces will be safer places.